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Groupon says IBM stole tech to craft GPS-based targeted sales pitches to shoppers

By Jonathan Bilyk | May 9, 2016

Patents 02

Groupon has delivered a lawsuit against IBM, demanding the tech titan pay it untold millions for allegedly taking elements of location-based shopping technology Groupon developed for use in its own programs which it sells to retailers to use GPS to target offers and promotions at certain customers.

On May 9, Groupon, of Chicago, filed suit in Chicago federal court against New York-based International Business Machines, asserting IBM infringed upon Groupon’s patent for the GPS-enabled shopping programs.

The complaint does not specify how much Groupon is asking the court to order IBM to pay. But the lawsuit said Groupon is seeking royalties from IBM based on IBM’s sales of its Websphere suite of programs, which Groupon estimated has earned IBM billions of dollars.

Groupon is represented in the action by attorneys with the firms of Marshall, Gerstein & Borun, of Chicago, and Fenwick & West, of Mountain View, Calif.

The complaint centered on IBM’s integration into its Websphere program suite of so-called “SoLoMo” technology, which allows for “the convergence of connected mobile devices, social networks and location based services.”

In its complaint, Groupon asserted that it “pioneered these Social-Local-Mobile services” and holds the associated patent rights.

The technology works by piecing together large bits of diverse information about “the locations and traits of owners of nearby mobile devices,” based on, among other things, GPS data and social media, and using that information to help retailers and others make better offers to the customers owning those mobile devices.

According to the complaint, IBM’s WebSphere technology also works by helping “businesses to contact customers in real time with targeted marketing communications and incentives based on their current location, activity and interests.” The complaint noted WebSphere helps retailers communicate in real time with customers by way of “customer ‘check-ins’ at a venue, store-based sensors and GPS data.”

However, Groupon alleged IBM didn’t just develop its own technology. Instead, Groupon alleged IBM’s programs “were built using Groupon’s innovations and patented technology.”

Groupon’s complaint alleged IBM, to catch up to other companies, “scrambled to add SoLoMo technology to its flagship WebSphere” and in the process “unlawfully used Groupon’s technology and infringed upon Groupon’s intellectual property.”

“IBM subsequently reaped millions of dollars in revenue from sales of its enhanced WebSphere software that bolstered its floundering business,” Groupon said.

Groupon said the court must intervene to stop “’Big Blue’ from further trampling on the intellectual property rights of today’s technology pioneers and to maintain a level playing field for continued innovation, disruption and growth.”

Groupon said it believes it is entitled to “royalties on the billions of dollars in revenue that IBM has received based on its unlawful use of Groupon’s patented technology.”

Groupon’s complaint asserted it received patent rights to the SoLoMo technology in 2010.

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Organizations in this Story

International Business Machines Corp. (IBM)Marshall, Gerstein & Borun LLPGroupon